Last year, Maryland National Bank reported gigantic losses.
The popular chairman of the bank's holding company resigned. The value of its publicly traded stock plummeted. The bank announced that many employees may lose their jobs.
"What happened?" I asked my friend, the banking expert and financial genius.
So he started to tell me about the federal government's deregulation of the banking industry, and how deregulation led to the merger and acquisition fever, and how the merger and acquisition fever led bank officials to make unusually speculative investments in risky real estate ventures, and how speculative, risky investments led to. . .
"Hold on there, hoss!" I said. "Let's just cut to the bottom line. They got greedy, right?"
"Well," said my friend, "actually it's a little more complicated than that."
"But the bottom line is, they got greedy."
"Well yes," he conceded. "The bottom line is, they got greedy."
"Say it again," I said.
"They got greedy."
"Say it louder," I said.
"OK, OK," he shouted. "They got greedy!"
So there it is. They got greedy.
But here's the funny part. The type of loans bank officials thought would prove too risky during this period -- the type of loans community activists literally had to twist their arms to make -- apparently have performed quite well.
In 1987, a local community advocacy group called, the Maryland Alliance for Responsible Investment issued an exhaustive report, "Maintaining the Divided City", that found that many of the area's largest financial institutions were unwilling to extend mortgage loans to low and moderate income families.
Maryland National Bank, the report found, was one of the worst offenders.
Meanwhile, business people complained that many financial institutions were similarly unwilling to invest in small businesses in minority communities.
"Basically," said Frank Fischer, director of counseling with the St. Ambrose Housing Aid Center, "banks didn't want to extend these loans for two reasons: first there is a lot of racial prejudice, although they would never say that. No one will ever say that.
"Second," he continued, "banks were very unwilling in the 1980s to make loans below a certain amount. They considered them very risky. They said they required too much legwork. And they said there was too little return for their investment."
Shortly afterward, though, Maryland National and MARI reached a joint agreement through which the bank made about 60 loans worth $4.5 million to small businesses and some 294 mortgages totaling over $13 million.
Today, Maryland National has gone from being one of the worst offenders to one of the most active lenders in terms of volume.
"It has been a very positive example of a partnership between community advocates and a commercial bank that has made home ownership possible for a lot of people," said Marianna Donisi-McCann, who chairs an advisory committee that monitors the program.
"A lot of these mortgages -- maybe 90 percent of them -- went to families that have never owned their own home, going back six generations. So it has made a big difference in people's lives, and, we think, it eventually will mean a positive change in the health of the city."
None of this comes as particularly astonishing news to some of the area's smaller institutions.
Harbor Bank, for instance, does 85 percent of its business in the black community, yet last month Harbor received a performance rating from Bank Financial Quarterly that was twice as high as Maryland National's.
Savings and loans such as Advance Federal, Ideal, and St. Casimir's Savings and Loan weathered the crises that hit the savings and loan industry, in part because their portfolio of moderate income mortgages proved to be such sound investments.
So, today we have these two banking experiences to draw upon: the high-flying real estate ventures that seemed so attractive in the 1980s and the relatively small home mortgage loans to low and moderate income families that seemed so questionable.
Said Donisi-McCann, "We said from the outset we didn't want you [the banks] to make bad loans. We just thought they were missing a lot of good people out there."
And they were right about that. The advocates were right.